This articles explains the power and limitations of the role of numbers in the use of decision trees. Decision tree analysis involves cumulating probabilities. The method is also used to derive a “discounted value”: the sum of each possible outcome multiplied by its cumulative probability. Probability estimates must be true to their location on the tree and must assess interdependence of outcomes at risk pivots. When calculating cumulative probabilities, probabilities along a path must absolutely must be independent. A decision tree that is too simple fails to represent complex realities. One of the strongest reasons to use decision analysis is that the lawyer’s intuitive gut calculator cannot know the cumulative probabilities for each possible outcome in a complicated case.
When done with integrity and competence, decision analysis can offer considerable insight, improve communication, and add greater rigor to the decisionmaking process. Yet it is also susceptible to error and manipulation in ways that we hope our readers will come to recognize and avoid.
Marjorie Corman Aaron,Shaking Decision Trees for Risks and Rewards, Dispute Resolution Magazine, Fall 2015, at 12.